Morocco - Pilot Project For Small-scale Mining Project

Document of fILE COPY The World Bank C FOR OFFICIAL USE ONLY Report No. P-3220-MOR REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE KINGDOM OF MOROCCO FOR A PILOT PROJECT FOR SMALL-SCALE MINING February 26, 1982 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  KINGDOM OF MOROCCO PILOT PROJECT FOR SMALL-SCALE MINING FISCAL YEAR January 1 - December 31 CURRENCY EQUIVALENTS Currency Unit Dirham (DH) DR 1.00 US$0.19 US$1.00 DH 5.20 WEIGHTS AND MEASURES Metric System British/US System 1 meter (m) 3.281 feet (ft) 1 kilometer (km) 0.622 miles (mi) 1 kilogram (kg) 2.205 pounds 1 metric ton (t) 1.1 short ton (st) PRINCIPAL ABBREVIATIONS AND ACRONYMS BMCE - Banque Marocaine du Commerce Extgrieur BRPM - Bureau de Recherches et de Participations Minieres CADETAF - Centrale d'Achat et de Developpement de la Region Miniere du Tafilalet et de.Figuig ENIM - Ecole Nationale de l'Industrie Minerale EPP - European Producer Price LME - London Metal Exchange HEM - Ministry of Energy and Mines PZ - Plomb de Zellidja tpy - tons per year  - i FOR OFFICIAL USE ONLY KINGDOM OF MOROCCO PILOT PROJECT FOR SMALL SCALE MINING LOAN AND PROJECT SUMMARY Borrower: Kingdom of Morocco Beneficiary: Centrale d'Achat et de Developpement de la Region Miniere du Tafilalet et de Figuig (CADETAF). Amcunt: US$9.5 million equivalent Terms: Amortization in 17 years including four years of grace, at an interest rate of 11.6% per annum. Relending Terms: The Government would onlend the Bank loan to CADETAF on the same terms. About $1.7 million of the Loan would be made available by CADETAF as credit in kind to beneficiary miners or miners'associations, to be repaid over 5 years with one year of grace, at an interest rate of 12% per annum. The Government would assume the foreign exchange risk. Pro ject Description: The project would increase the production of lead and zinc concentrates, thus generating foreign exchange earnings, by: permitting the mining and processing of low-grade ores; facilitating the marketing of high-grade ores; and promoting increased production in selected mines. The financial, technical and administrative base of CADETAF would be strengthened, so that it can improve and expand its services to artisanal miners, and lay the basis for future expansion of small-scale mining activities. The project consists of: (a) acquisition by CADETAF of mobile lead and zinc concentrators, and of a crushing and grinding unit; (b) provision to miners against credit of mining equipment and works; (c) establishment of a training mine; (d) establishment of ore collector centers and provision of equipment to CADETAF; (e) development of CADETAF's financial and management systems and of its financial organization; and (f) execution of geological and socio-economic studies. The beneficiaries of the project would be about 7,500 self-employed artisanal miners with average incomes now close to the absolute rural poverty level. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Since the miners have a high price elasticity of supply and their response to the measures introduced under the project cannot be reliably predicted, constituting a major project risk, the project was designed as a pilot phase, to test the miners' response to the new equipment, services and policies introduced lunder the project. A number of measures would also be implemented under the project to stabilize CADETAF's financial position and reduce its vulnerability to sudden declines in metal prices or mining production. Estimated Cost:l/ Local Foreign Total Item -------US$ Million--------- Lead concentrator 0.59 1.51 2.10 Zinc concentrator 0.32 0.86 1.18 Crushing and grinding unit 0.11 0.23 0.34 Financing for mining equipment and works 0.44 1.37 1.81 Training mine 0.03 0.08 0.11 Ore collection centers 0.38 0.15 0.53 Equipment for CADETAF 0.07 0.21 0.28 Technical assistance 0.18 0.18 0.36 Geological and socio-econ. studies 0.89 0.90 1.79 Working capital 1.97 -- 1.97 Base cost 4.98 5.49 10.47 Physical contingencies 0.20 0.47 0.67 Price contingencies 0.52 1.20 1.72 Total project cost 5.70 7.16 12.86 Interest during construction - 2.34 2.34 TOTAL FINANCING REQUIRED 5.70 9.50 15.20 Financing Plan Local Foreign Total ----------US$ Million--------